Is the mobile opportunity a mirage?

Applying the classical advertising interruption model to new media is a mistake, argues Nic Hodges, head of innovation and technology at MediaCom Australia

There is one chart that mobile folk drool over. This year’s version was published recently as part of the state of the digi-union address by Mary Meeker, the doyenne of internet analysts.

Every year that presentation includes the one killer chart for mobile aficionados; the chart that proves that mobile is undervalued and underinvested in by advertisers.

Essentially, it tracks the time spent with each key media and matches it with the advertising investment. The gap shows that the mobile advertising opportunity could be worth $20bn (£12.8bn) in the US alone.

It’s a chart that has God-like status. But what if… What if Mary Meeker has got it wrong? What if the gap between the time we spend with mobile and the amount of advertising we see on it is not an opportunity?

What if it’s actually an indicator of how our relationship with technology – and specifically screens – is changing? And that’s the reason why the mobile gap doesn’t seem to be closing.

The screen was once a novelty; it was something we huddled around. It was scarce and valuable. But now screens are everywhere. There are too many of them, and both technology and people are starting to respond. Designers are starting to look at what can be achieved without a screen. Not having a screen is becoming as novel as having one once was.

Internet of Things

This is one of the drivers behind the Internet of Things movement. If we can create ‘things’ that operate on the network with discrete functions, the need for a screen disappears. Or at least the role of the screen changes – connected thermostat Nest has a screen, but you can’t watch YouTube on it.

Where there are still screens, real estate is becoming increasingly valuable to the user, at the cost of the advertiser. Our TVs are now just as likely to be streaming content from iTunes or torrents, as they are to be watching old fashioned, ad-interrupted broadcast signals.

In Australia, Nielsen’s Connect Consumers report found that 43 per cent of Australians are watching official on-demand catch-up TV or unofficially downloaded TV content. This is predicted to rise to 61 per cent by the end of 2013.

Our web experience, at one point groaning under the weight of a dozen banner ads per page, is now moving to the tablet – a device that doesn’t lend itself to the banners or the business models of the ‘old web’.

Penetration of tablets is increasing rapidly, creating a new digital gap. Nielsen reports that 31 per cent of Australians currently have a tablet, expected to rise to 50 per cent by the end of 2013. According to IAB Australia, Tablet advertising in Q2 ’13 was Australian $21.2m (£12.2m), just 2.3 per cent of the $910m spent on online advertising.

And while tablets are proving a challenge for advertising revenue, mobile is dismal. Mobile screen real estate is too valuable to be wasted on advertising. In its Q1 earnings report, Google blamed mobile for the 4 per cent drop in average CPC (cost-per-click).

For media owners, offline dollars became digital pennies, and it seems that digital pennies have become mobile drachma. For advertisers, interruption models are slowly being chipped away. It hasn’t happened overnight, but over a decade.

These interruption models are at the heart of the ‘$20bn gap’. We’re trained to have a mass media mindset, to assume that where there’s attention there should also be ads. But as PaidContent’s Mathew Ingram has argued, such mass media business models may have been a historical anomaly.

Rather than a $20bn opportunity, the gap between time spent on mobile and advertising investment should be viewed with at least a pinch of trepidation.

The current mobile landscape could be the new normal. And if it is, it appears that most of our media consumption is moving to a world where eyeballs don’t always equal advertising.

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